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Businesses give cautious welcome to Draghi's QE push

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A trader in Frankfurt watches the announcement as all eyes  were on ECB president Mario Draghi around Europe yesterday. Reuters

A trader in Frankfurt watches the announcement as all eyes were on ECB president Mario Draghi around Europe yesterday. Reuters

A trader in Frankfurt watches the announcement as all eyes were on ECB president Mario Draghi around Europe yesterday. Reuters

Irish businesses have welcomed the European Central Bank's plans to launch a massive quantitative easing programme.

The euro plummeted to an 11-year low off the back of Mario Draghi's announcement in a boon for Irish exporters.

"Ireland has more to benefit than any other Eurozone country from a weak euro...we're number one in terms of what goes outside the Eurozone," Ibec chief economist Fergal O'Brien told the Irish Independent.

"When you look at it in the round, with a weaker euro and falling oil prices this is a significant stimulus package for the Eurozone economy and there'll be some very particular benefits for the Irish economy from an export perspective, both in terms of the exchange rate and the impact that it should have on some export markets," he added.

But Mr O'Brien said the package is unlikely to be a panacea for the sluggish Eurozone economy because of lingering structural problems.

Irish Small and Medium Enterprises Association (ISME) chief executive Mark Fielding said the package would be good for small businesses that export to the UK and the US, but said his welcome was cautious.

"It'll mean we're going to start importing a little bit of inflation I think, because of the amount of imports we have coming from the non-euro area," Mr Fielding told the Irish Independent.

"The inflation could fuel higher wage demands than we already have...we need to be careful that it's not just about quantitative easing, and keep an eye on our competitiveness here.

"We're devaluing our currency, we're doing a Bertie Ahern on it at a European level...we cannot build our export-facing economy just on fluctuations in currency alone.

"As we know that can turn topsy-turvy tomorrow morning," Mr Fielding said.

Separately yesterday, figures released by the European Union's official statistics body showed that Ireland's Government debt-to-GDP ratio was still the fourth-highest in Europe - behind Greece, Italy and Portugal - at the end of the third quarter of last year.

But the figures show Ireland had the sharpest fall in debt-to-GDP in the year to the end of last September, a 9.4 percentage-point drop that was 1.4 percentage points ahead of the next-best country Poland.

In the third quarter of last year Government debt-to-GDP fell in the EU as a whole for the first time in fifteen consecutive quarters. The average ratio was 92.1 pc.

The fastest rising debt in the year to the end of September was in Slovenia, where the debt-to-GDP ratio grew 16.8 percentage points.

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